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EX-32.2 - EX-32.2 - MGM Resorts Internationalmgm-ex322_9.htm
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EX-10.1 - EX-10.1 - MGM Resorts Internationalmgm-ex101_39.htm

 

 

UNITED STATES

SECURITIES & EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File No. 001-10362

 

MGM Resorts International

(Exact name of registrant as specified in its charter)

 

 

Delaware

88-0215232

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3600 Las Vegas Boulevard South, Las Vegas, Nevada 89109

(Address of principal executive offices)

(702) 693-7120

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   Yes       No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):   Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

Accelerated filer

 

Non-accelerated filer

  

Smaller reporting company

 

Emerging growth company

  

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: Yes    No   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):   Yes       No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

 Class 

 

 Outstanding at May 1, 2018 

Common Stock, $.01 par value

 

556,786,099 shares

 

 

 

 

 

 


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

 

FORM 10-Q

 

I N D E X

 

 

 

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

 

Consolidated Balance Sheets at March 31, 2018 and December 31, 2017

1

 

 

Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and March 31, 2017

2

 

 

Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2018 and March 31, 2017

3

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and March 31, 2017

4

 

 

Condensed Notes to Consolidated Financial Statements

5

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

 

Controls and Procedures

33

 

PART II.

OTHER INFORMATION

 

Item 1.

 

Legal Proceedings

34

Item 1A.

 

Risk Factors

34

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 6.

 

Exhibits

35

 

SIGNATURES

36

 

 

 

 


 

Part I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

March 31,

 

 

December 31,

 

 

2018

 

 

2017

 

ASSETS

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

1,525,402

 

 

$

1,499,995

 

Accounts receivable, net

 

505,591

 

 

 

542,273

 

Inventories

 

107,309

 

 

 

102,292

 

Income tax receivable

 

41,653

 

 

 

42,551

 

Prepaid expenses and other

 

212,758

 

 

 

189,244

 

Total current assets

 

2,392,713

 

 

 

2,376,355

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

19,711,829

 

 

 

19,635,459

 

 

 

 

 

 

 

 

 

Other assets

 

 

 

 

 

 

 

Investments in and advances to unconsolidated affiliates

 

1,050,795

 

 

 

1,033,297

 

Goodwill

 

1,800,586

 

 

 

1,806,531

 

Other intangible assets, net

 

3,819,369

 

 

 

3,877,960

 

Other long-term assets, net

 

522,978

 

 

 

430,440

 

Total other assets

 

7,193,728

 

 

 

7,148,228

 

 

$

29,298,270

 

 

$

29,160,042

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

253,391

 

 

$

255,028

 

Construction payable

 

434,939

 

 

 

474,807

 

Current portion of long-term debt, net

 

539,608

 

 

 

158,042

 

Accrued interest on long-term debt

 

125,524

 

 

 

135,785

 

Other accrued liabilities

 

2,233,426

 

 

 

2,114,635

 

Total current liabilities

 

3,586,888

 

 

 

3,138,297

 

 

 

 

 

 

 

 

 

Deferred income taxes, net

 

1,206,591

 

 

 

1,295,375

 

Long-term debt, net

 

12,742,861

 

 

 

12,751,052

 

Other long-term obligations

 

282,879

 

 

 

284,416

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

78,680

 

 

 

79,778

 

Stockholders' equity

 

 

 

 

 

 

 

Common stock, $.01 par value: authorized 1,000,000,000 shares, issued and outstanding 556,768,821 and 566,275,789 shares

 

5,568

 

 

 

5,663

 

Capital in excess of par value

 

4,999,958

 

 

 

5,357,709

 

Retained earnings

 

2,372,744

 

 

 

2,217,299

 

Accumulated other comprehensive loss

 

(7,480

)

 

 

(3,610

)

Total MGM Resorts International stockholders' equity

 

7,370,790

 

 

 

7,577,061

 

Noncontrolling interests

 

4,029,581

 

 

 

4,034,063

 

Total stockholders' equity

 

11,400,371

 

 

 

11,611,124

 

 

$

29,298,270

 

 

$

29,160,042

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

1


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2018

 

 

2017

 

Revenues

 

 

 

 

 

 

 

 

Casino

 

$

1,394,316

 

 

$

1,271,474

 

Rooms

 

 

539,480

 

 

 

558,812

 

Food and beverage

 

 

455,411

 

 

 

469,336

 

Entertainment, retail and other

 

 

329,750

 

 

 

317,729

 

Reimbursed costs

 

 

103,280

 

 

 

100,215

 

 

 

 

2,822,237

 

 

 

2,717,566

 

Expenses

 

 

 

 

 

 

 

 

Casino

 

 

762,649

 

 

 

666,935

 

Rooms

 

 

189,058

 

 

 

188,669

 

Food and beverage

 

 

353,389

 

 

 

353,162

 

Entertainment, retail and other

 

 

226,834

 

 

 

223,389

 

Reimbursed costs

 

 

103,280

 

 

 

100,215

 

General and administrative

 

 

417,890

 

 

 

388,788

 

Corporate expense

 

 

99,509

 

 

 

73,132

 

Preopening and start-up expenses

 

 

66,917

 

 

 

15,066

 

Property transactions, net

 

 

5,898

 

 

 

1,696

 

Depreciation and amortization

 

 

268,822

 

 

 

249,769

 

 

 

 

2,494,246

 

 

 

2,260,821

 

Income from unconsolidated affiliates

 

 

31,766

 

 

 

39,766

 

Operating income

 

 

359,757

 

 

 

496,511

 

Non-operating income (expense)

 

 

 

 

 

 

 

 

Interest expense, net of amounts capitalized

 

 

(167,909

)

 

 

(174,059

)

Non-operating items from unconsolidated affiliates

 

 

(9,010

)

 

 

(6,921

)

Other, net

 

 

(1,916

)

 

 

(817

)

 

 

 

(178,835

)

 

 

(181,797

)

Income before income taxes

 

 

180,922

 

 

 

314,714

 

Benefit (provision) for income taxes

 

 

85,379

 

 

 

(62,140

)

Net income

 

 

266,301

 

 

 

252,574

 

Less: Net income attributable to noncontrolling interests

 

 

(42,857

)

 

 

(46,162

)

Net income attributable to MGM Resorts International

 

$

223,444

 

 

$

206,412

 

Net income per share of common stock attributable to MGM Resorts International

 

 

 

 

 

 

 

 

Basic

 

$

0.39

 

 

$

0.36

 

Diluted

 

$

0.38

 

 

$

0.36

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

564,832

 

 

 

574,403

 

Diluted

 

 

571,970

 

 

 

580,165

 

Dividends declared per common share

 

$

0.12

 

 

$

0.11

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

2


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2018

 

 

2017

 

Net income

 

$

266,301

 

 

$

252,574

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(24,152

)

 

 

(12,933

)

Unrealized gain (loss) on cash flow hedges

 

 

13,856

 

 

 

(634

)

Other comprehensive loss

 

 

(10,296

)

 

 

(13,567

)

Comprehensive income

 

 

256,005

 

 

 

239,007

 

Less: Comprehensive income attributable to noncontrolling interests

 

 

(36,431

)

 

 

(40,431

)

Comprehensive income attributable to MGM Resorts International

 

$

219,574

 

 

$

198,576

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

3


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

 

March 31,

 

 

2018

 

 

2017

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

$

266,301

 

 

$

252,574

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

268,822

 

 

 

249,769

 

Amortization of debt discounts, premiums and issuance costs

 

9,634

 

 

 

8,844

 

Loss on retirement of long-term debt

 

1,019

 

 

 

 

Provision for doubtful accounts

 

9,141

 

 

 

12,867

 

Stock-based compensation

 

16,110

 

 

 

15,960

 

Property transactions, net

 

5,898

 

 

 

1,696

 

Income from unconsolidated affiliates

 

(19,435

)

 

 

(32,845

)

Distributions from unconsolidated affiliates

 

4,550

 

 

 

4,250

 

Deferred income taxes

 

(89,746

)

 

 

(9,255

)

Change in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

27,388

 

 

 

36,349

 

Inventories

 

(5,114

)

 

 

(2,796

)

Income taxes receivable and payable, net

 

900

 

 

 

66,696

 

Prepaid expenses and other

 

(26,712

)

 

 

(40,899

)

Prepaid Cotai land concession premium

 

1,722

 

 

 

(12,947

)

Accounts payable and accrued liabilities

 

113,717

 

 

 

(140,452

)

Other

 

(6,531

)

 

 

(4,376

)

Net cash provided by operating activities

 

577,664

 

 

 

405,435

 

Cash flows from investing activities

 

 

 

 

 

 

 

Capital expenditures, net of construction payable

 

(418,624

)

 

 

(456,075

)

Dispositions of property and equipment

 

225

 

 

 

180

 

Investments in unconsolidated affiliates

 

(2,503

)

 

 

(3,500

)

Other

 

(11,475

)

 

 

(6,554

)

Net cash used in investing activities

 

(432,377

)

 

 

(465,949

)

Cash flows from financing activities

 

 

 

 

 

 

 

Net borrowings under bank credit facilities – maturities of 90 days or less

 

380,035

 

 

 

107,480

 

Debt issuance costs

 

(4,544

)

 

 

(4,905

)

Dividends paid to common shareholders

 

(67,999

)

 

 

(63,182

)

Distributions to noncontrolling interest owners

 

(47,380

)

 

 

(24,843

)

Purchases of common stock

 

(362,400

)

 

 

 

Retirement of debentures

 

(2,265

)

 

 

 

Other

 

(12,497

)

 

 

(4,084

)

Net cash provided by (used in) financing activities

 

(117,050

)

 

 

10,466

 

Effect of exchange rate on cash

 

(2,830

)

 

 

(1,089

)

Cash and cash equivalents

 

 

 

 

 

 

 

Net increase (decrease) for the period

 

25,407

 

 

 

(51,137

)

Balance, beginning of period

 

1,499,995

 

 

 

1,446,581

 

Balance, end of period

$

1,525,402

 

 

$

1,395,444

 

Supplemental cash flow disclosures

 

 

 

 

 

 

 

Interest paid, net of amounts capitalized

$

168,404

 

 

$

212,147

 

Federal, state and foreign income taxes paid, net of refunds

 

2,935

 

 

 

2,560

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

4


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  

 

NOTE 1 — ORGANIZATION

 

Organization. MGM Resorts International (together with its consolidated subsidiaries, unless otherwise indicated or unless the context requires otherwise, the “Company”) is a Delaware corporation that acts largely as a holding company and, through subsidiaries, owns and operates casino resorts.

 

The Company owns and operates the following integrated casino, hotel and entertainment resorts in Las Vegas, Nevada: Bellagio, MGM Grand Las Vegas, The Mirage, Mandalay Bay, Luxor, New York-New York, Monte Carlo (which was rebranded as Park MGM in May 2018), Excalibur and Circus Circus Las Vegas. Operations at MGM Grand Las Vegas include management of The Signature at MGM Grand Las Vegas, a condominium-hotel consisting of three towers. The Company operates and, along with local investors, owns MGM Grand Detroit in Detroit, Michigan and MGM National Harbor in Prince George’s County, Maryland. The Company also owns and operates Borgata located on Renaissance Pointe in the Marina area of Atlantic City, New Jersey and the following resorts in Mississippi: Beau Rivage in Biloxi and Gold Strike in Tunica. Additionally, the Company owns and operates The Park, a dining and entertainment district located between New York-New York and Monte Carlo, Shadow Creek, an exclusive world-class golf course located approximately ten miles north of its Las Vegas Strip resorts, Primm Valley Golf Club at the California/Nevada state line and Fallen Oak golf course in Saucier, Mississippi.

 

MGM Growth Properties LLC (“MGP”), a consolidated subsidiary of the Company, is organized as an umbrella partnership REIT (commonly referred to as an UPREIT) structure in which substantially all of its assets are owned by and substantially all of its businesses are conducted through MGM Growth Properties Operating Partnership LP (the “Operating Partnership”), its subsidiary. MGP has two classes of authorized and outstanding voting common shares (collectively, the “shares”): Class A shares and a single Class B share. The Company owns MGP’s Class B share, which does not provide its holder any rights to profits or losses or any rights to receive distributions from operations of MGP or upon liquidation or winding up of MGP. MGP’s Class A shareholders are entitled to one vote per share, while the Company, as the owner of the Class B share, is entitled to an amount of votes representing a majority of the total voting power of MGP’s shares so long as the Company and its controlled affiliates’ (excluding MGP) aggregate beneficial ownership of the combined economic interests in MGP and the Operating Partnership does not fall below 30%. The Company and MGP each hold Operating Partnership units representing limited partner interests in the Operating Partnership. The general partner of the Operating Partnership is a wholly-owned subsidiary of MGP. The Operating Partnership units held by the Company are exchangeable into Class A shares of MGP on a one-to-one basis, or cash at the fair value of a Class A share. The determination of settlement method is at the option of MGP’s independent conflicts committee. As of March 31, 2018, the Company owned 73.4% of the Operating Partnership units, and MGP held the remaining 26.6% of the Operating Partnership units.

 

Pursuant to a master lease agreement between a subsidiary of the Company (the “tenant”) and a subsidiary of the Operating Partnership (the “landlord”), the tenant leases the real estate assets of The Mirage, Mandalay Bay, Luxor, New York-New York, Monte Carlo, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, and MGM National Harbor from the landlord.

 

The Company has an approximate 56% controlling interest in MGM China, which owns MGM Grand Paradise, S.A. (“MGM Grand Paradise”). MGM Grand Paradise owns and operates the MGM Macau resort and casino and the related gaming subconcession and land concessions as well as MGM Cotai, an integrated casino, hotel and entertainment resort located on the Cotai Strip in Macau that opened on February 13, 2018.

 

The Company owns 50% of and manages CityCenter Holdings, LLC (“CityCenter”), located between Bellagio and Monte Carlo. The other 50% of CityCenter is owned by Infinity World Development Corp, a wholly owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. CityCenter consists of Aria, an integrated casino, hotel and entertainment resort; and Vdara, a luxury condominium-hotel. In addition, CityCenter features residential units in the Residences at Veer. During the quarter ended March 31, 2018, a subsidiary of CityCenter entered into an agreement for the sale of the Mandarin Oriental Las Vegas. See Note 3 for additional information related to CityCenter.

 

The Company and a subsidiary of Anschutz Entertainment Group, Inc. (“AEG”) each own 42.5% of the Las Vegas Arena Company, LLC (“Las Vegas Arena Company”), the entity which owns the T-Mobile Arena, and Athena Arena, LLC owns the remaining 15%. The Company manages the T-Mobile Arena, which is located on a parcel of the Company’s land between Frank Sinatra Drive and New York-New York, adjacent to the Las Vegas Strip. The T-Mobile Arena is a 20,000 seat venue designed to host world-class events – from mixed martial arts, boxing, basketball and bull riding, to high profile awards shows and top-name concerts, and is the home of the Vegas Golden Knights of the National Hockey League. Additionally, the Company leases the MGM Grand Garden Arena, located adjacent to the MGM Grand Las Vegas, to the Las Vegas Arena Company. See Note 3 for additional information regarding the Company’s investment in the Las Vegas Arena Company.

5


 

 

The Company also has a 50% interest in Grand Victoria. Grand Victoria is a riverboat casino in Elgin, Illinois; an affiliate of Hyatt Gaming owns the other 50% of Grand Victoria and also operates the resort. In April 2018, the Company, along with its venture partner, entered into a definitive agreement to sell the Grand Victoria Casino. See Note 3 for additional information regarding the Company’s investment in Grand Victoria.

 

A subsidiary of the Company was awarded a casino license to build and operate MGM Springfield in Springfield, Massachusetts. MGM Springfield is in the process of being developed on approximately 14 acres of land in downtown Springfield. The Company’s plans for the resort currently include a casino with approximately 2,500 slots and 120 table games including poker; a 250-room hotel; 110,000 square feet of retail and restaurant space; 46,000 square feet of meeting and event space; and a 3,500 space parking garage, with an expected development and construction cost of approximately $960 million, excluding capitalized interest and land-related costs. MGM Springfield is expected to open on August 24, 2018.

 

The Company has two reportable segments: domestic resorts and MGM China. See Note 9 for additional information about the Company’s segments.

 

NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation. As permitted by the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the Company’s 2017 annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

 

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s interim financial statements. The results for such periods are not necessarily indicative of the results to be expected for the full year.

 

Principles of consolidation. Management has determined that MGP is a variable interest entity (“VIE”) because the Class A equity investors as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance. The Company has determined that it is the primary beneficiary of MGP and consolidates MGP because (i) its ownership of MGP’s single Class B share entitles it to a majority of the total voting power of MGP’s shares, and (ii) the exchangeable nature of the Operating Partnership units owned provide the Company the right to receive benefits from MGP that could potentially be significant to MGP. The Company has recorded MGP’s ownership interest in the Operating Partnership of 26.6% as of March 31, 2018 as noncontrolling interest in the Company’s consolidated financial statements. As of March 31, 2018 and December 31, 2017, on a consolidated basis, MGP had total assets of $10.3 billion and $10.4 billion, respectively, primarily related to its real estate investments, and total liabilities of $4.3 billion as of both dates, primarily related to its indebtedness.

 

Property and equipment. Property and equipment are stated at cost. A significant amount of the Company’s property and equipment was acquired through business combinations and therefore recognized at fair value at the acquisition date. Gains and losses on dispositions of property and equipment are included in the determination of income or loss. Maintenance costs are expensed as incurred. As of March 31, 2018 and December 31, 2017, the Company had accrued $29 million and $28 million, respectively, for property and equipment within accounts payable, and $34 million related to construction retention within other long-term liabilities for both periods.

 

Revenue recognition. The Company’s revenue contracts with customers consist of casino wager, hotel room sales, food and beverage transactions, entertainment shows, and retail transactions.

 

The transaction price for a casino wager is the difference between gaming wins and losses (“net win”). In certain circumstances, the Company offers discounts on markers, which is estimated based upon historical business practice, and recorded as a reduction of casino revenue. Commissions paid to gaming promoters and VIP players at MGM China are also recorded as a reduction of casino revenue. The Company accounts for casino revenue on a portfolio basis given the similar characteristics of wagers by recognizing net win per gaming day versus on an individual wager basis.

 

For casino wager contracts that include complimentary goods and services provided by the Company to gaming patrons on a discretionary basis to incentivize gaming, the Company allocates revenue to the good or service delivered based upon stand-alone selling price (“SSP”). Discretionary complimentaries provided by the Company and supplied by third parties are recognized as an operating expense. The Company accounts for complimentaries on a portfolio basis given the similar characteristics of the incentives by recognizing redemption per gaming day.

 

6


 

For casino wager contracts that include incentives earned by customers under the Company’s loyalty programs, the Company allocates a portion of net win based upon the SSP of such incentive (less estimated breakage). This allocation is deferred and recognized as revenue when the customer redeems the incentive. When redeemed, revenue is recognized in the department that provides the goods or service. Redemption of loyalty incentives at third party outlets are deducted from the loyalty liability and amounts owed are paid to the third party, with any discount received recorded as other revenue. Commissions, complimentaries, and other incentives provided to gaming customers were $540 million and $485 million for the three month period ending March 31, 2018 and 2017, respectively. After allocating revenue to other goods and services provided as part of casino wager contracts, the Company records the residual amount to casino revenue.

 

The transaction price of rooms, food and beverage, and retail contracts is the net amount collected from the customer for such good and services. The transaction price for such contracts is recorded as revenue when the good or service is transferred to the customer over their stay at the hotel or when the delivery is made for the food & beverage and retail & other contracts. Sales and usage-based taxes are excluded from revenues. For some arrangements, the Company acts as an agent in that it arranges for another party to transfer goods and services, which primarily include certain of the Company’s entertainment shows as well as customer rooms arranged by online travel agents.

 

The Company also has other contracts that include multiple goods and services, such as packages that bundle food, beverage, or entertainment offerings with hotel stays and convention services. For such arrangements, the Company allocates revenue to each good or service based on its relative SSP.  The Company primarily determines the SSP of rooms, food and beverage, entertainment, and retail goods and services based on the amount that the Company charges when sold separately in similar circumstances to similar customers.

 

Contract and Contract-Related Liabilities. There may be a difference between the timing of cash receipts from the customer and the recognition of revenue, resulting in a contract or contract-related liability. The Company generally has three types of liabilities related to contracts with customers: (1) outstanding chip liability, which represents the amounts owned in exchange for gaming chips held by a customer, (2) loyalty program obligations, which represents the deferred allocation of revenue relating to loyalty program incentives earned, as discussed above, and (3) customer advances and other, which is primarily funds deposited by customers before gaming play occurs (“casino front money”) and advance payments on goods and services yet to be provided such as advance ticket sales and deposits on rooms and convention space or for unpaid wagers. These liabilities are generally expected to be recognized as revenue within one year of being purchased, earned, or deposited and are recorded within “Other accrued liabilities” on the Company’s consolidated balance sheets.

 

The following table summarizes the activity related to contract and contract-related liabilities:

 

 

Outstanding Chip Liability

 

 

Loyalty Program

 

 

Customer Advances and Other

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

(in thousands)

 

Balance at January 1

$

597,753

 

 

$

227,538

 

 

$

91,119

 

 

$

88,379

 

 

$

539,626

 

 

$

437,287

 

Balance at March 31

 

779,242

 

 

 

290,614

 

 

 

93,459

 

 

 

88,814

 

 

 

492,599

 

 

 

400,051

 

Increase / (decrease)

 

181,489

 

 

 

63,076

 

 

 

2,340

 

 

 

435

 

 

 

(47,027

)

 

 

(37,236

)

 

Reimbursed costs. Costs reimbursed pursuant to management services are recognized as revenue in the period it incurs the costs as this reflects when the Company performs its related performance obligation and is entitled to reimbursement. Reimbursed costs relate primarily to the Company’s management of CityCenter.

 

Revenue by source. The Company presents the revenue earned disaggregated by the type or nature of the good or service (casino, room, food and beverage, and entertainment, retail and other) and by relevant geographic region within Note 9. Lease revenues earned by the Company from third-parties are classified within the line item corresponding to the type or nature of the tenant’s good or service. Lease revenues include $13 million and $12 million recorded within food and beverage revenue for the three month period ended March 31, 2018 and 2017, respectively, and $21 million and $19 million recorded within entertainment, retail, and other revenue for the same such periods, respectively.

 

Recently issued accounting standards. In May 2014, the FASB issued the ASC 606, “Revenue from Contracts with Customers (Topic 606)” which outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Under the standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods and services.

 

7


 

The Company adopted ASC 606 on a full retrospective basis effective January 1, 2018. The most significant impacts of adoption of the new accounting pronouncement were as follows:

 

 

Promotional Allowances: The Company no longer recognizes revenues for goods and services provided to customers for free as an inducement to gamble as gross revenue with a corresponding offset to promotional allowances to arrive at net revenues, and accordingly the promotional allowances line item has been removed. The majority of such amounts previously included in promotional allowances now offset casino revenues based on an allocation of revenues to performance obligations using stand-alone selling price. This change resulted in a reclassification of revenue between revenue line items;

 

 

Loyalty Accounting: As discussed within Revenue Recognition above, the outstanding performance obligations of the loyalty program liability are now recognized at retail value of such benefits owed to the customer (less estimated breakage). This change resulted in a decrease to retained earnings as of January 1, 2015 of $29 million, net of tax of $15 million, with a corresponding increase primarily to other accrued liabilities, as a result of the initial application of the standard and did not have a significant impact to other balance sheet accounts or earnings;

 

 

Gaming Promoter Commission: Commissions paid to gaming promoters under MGM China’s incentive program are now fully reflected as a reduction in casino revenue. This change resulted in a decrease in casino expense and a corresponding decrease in casino revenue;

 

 

Gross versus Net Presentation: Mandatory service charges on food and beverage and wide area progressive operator fees are recorded gross, that is, the amount received from the customer has been recorded as revenue with the corresponding amount paid as an expense. These changes resulted in an increase in revenue with a corresponding increase in expense;

 

 

Estimated Cost of Promotional Allowances: The Company no longer reclassifies the estimated cost of complimentaries provided to the gaming patron from other expense line items to the casino expense line item. This change resulted in a reclassification between expense line items.

 

8


 

These changes, and other less significant adjustments that were required upon adoption, did not have an aggregate material impact on operating income, net income, or cash flows. The following tables show the increase/(decrease) to our 2017 quarters and full-year 2017, 2016, and 2015 income statement line items as follows:

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

Dec 31, 2017

 

Sep 30, 2017

 

June 30, 2017

 

Mar 31, 2017

 

 

Dec 31, 2017

 

Dec 31, 2016

 

Dec 31, 2015

 

 

 

Increase/(decrease)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

Casino

 

$

(241,045

)

$

(260,644

)

$

(232,305

)

$

(233,915

)

 

$

(967,909

)

$

(828,364

)

$

(782,222

)

Rooms

 

 

(2,987

)

 

8,518

 

 

(715

)

 

(3,455

)

 

 

1,361

 

 

(20,814

)

 

(42,152

)

Food and beverage

 

 

16,296

 

 

21,967

 

 

18,552

 

 

24,867

 

 

 

81,682

 

 

87,895

 

 

72,990

 

Entertainment, retail, and other

 

 

(1,204

)

 

(2,867

)

 

(3,328

)

 

(1,169

)

 

 

(8,568

)

 

(9,142

)

 

(10,867

)

 

 

 

(228,940

)

 

(233,026

)

 

(217,796

)

 

(213,672

)

 

 

(893,434

)

 

(770,425

)

 

(762,251

)

Promotional allowances

 

 

229,297

 

 

236,460

 

 

228,193

 

 

223,059

 

 

 

917,009

 

 

793,571

 

 

751,773

 

 

 

 

357

 

 

3,434

 

 

10,397

 

 

9,387

 

 

 

23,575

 

 

23,146

 

 

(10,478

)

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Casino

 

 

(147,081

)

 

(147,144

)

 

(135,898

)

 

(137,660

)

 

 

(567,783

)

 

(504,561

)

 

(519,569

)

Rooms

 

 

37,260

 

 

35,370

 

 

34,381

 

 

33,833

 

 

 

140,844

 

 

121,551

 

 

113,560

 

Food and beverage

 

 

100,043

 

 

104,786

 

 

101,516

 

 

103,317

 

 

 

409,662

 

 

367,166

 

 

353,364

 

Entertainment, retail, and other

 

 

10,220

 

 

11,779

 

 

11,676

 

 

10,718

 

 

 

44,393

 

 

41,401

 

 

39,306

 

General and administrative

 

 

(68

)

 

(111

)

 

(114

)

 

(47

)

 

 

(340

)

 

(83

)

 

9

 

Corporate expense

 

 

(2

)

 

 

 

40

 

 

(41

)

 

 

(3

)

 

(69

)

 

(71

)

 

 

 

372

 

 

4,680

 

 

11,601

 

 

10,120

 

 

 

26,773

 

 

25,405

 

 

(13,401

)

Income from unconsolidated affiliates

 

 

25

 

 

89

 

 

56

 

 

63

 

 

 

233

 

 

671

 

 

471

 

Operating income (loss)

 

 

10

 

 

(1,157

)

 

(1,148

)

 

(670

)

 

 

(2,965

)

 

(1,588

)

 

3,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

10

 

 

(1,157

)

 

(1,148

)

 

(670

)

 

 

(2,965

)

 

(1,588

)

 

3,394

 

Benefit (provision) for income taxes

 

 

(6,310

)

 

405

 

 

401

 

 

235

 

 

 

(5,269

)

 

556

 

 

(1,189

)

Net income (loss)

 

 

(6,300

)

 

(752

)

 

(747

)

 

(435

)

 

 

(8,234

)

 

(1,032

)

 

2,205

 

Net income (loss) attributable to MGM Resorts International

 

 

(6,300

)

 

(752

)

 

(747

)

 

(435

)

 

 

(8,234

)

 

(1,032

)

 

2,205

 

Net income (loss) per share of common stock attributable to MGM Resorts International

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.03

)

$

 

$

(0.01

)

$

 

 

$

(0.03

)

$

 

$

 

Diluted

 

$

(0.03

)

$

 

$

 

$

 

 

$

(0.03

)

$

 

$

 

 

In February 2016, the FASB issued ASC 842 “Leases (Topic 842),” which replaces the existing guidance in ASC 840, “Leases.” ASC 842 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. ASC 842 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use (“ROU”) asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the ROU asset and for operating leases the lessee would recognize a straight-line total lease expense. The Company is currently assessing the impact the adoption of ASC 842 will have on its consolidated financial statements and footnote disclosures.

 

In January 2018, the Company adopted ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force),” (“ASU 2016-15”). ASU 2016-15 amends the guidance of ASC 230 on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of ASU 2016-15 is to reduce the diversity in practice that has resulted from the lack of consistent principles, specifically clarifying the guidance on eight cash flow issues. The adoption of ASU 2016-15 did not have a material effect on the Company’s consolidated financial statements and footnote disclosures.

 

In March 2018, the FASB issued ASU No. 2018-05, “Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118,” ("ASU 2018-05"). ASU 2018-05 provides guidance on accounting for the tax effects of the U.S. Tax Cuts and Jobs Act (the “Tax Act”) pursuant to the Staff Accounting Bulletin No. 118, which allows companies to complete the accounting under ASC 740 within a one-year measurement period from the Tax Act enactment date, which occurred in the financial statements for the year ended December 31, 2017. The Company continues to evaluate the tax effects of the Tax Act (see Note 5) and expects to finalize its provisional amounts by the fourth quarter of 2018.

 

9


 

Subsequent events. On April 4, 2018, the Operating Partnership entered into an agreement with Milstein Entertainment LLC to acquire the Hard Rock Rocksino Northfield Park ("Rocksino") for approximately $1.06 billion. The membership interest purchase agreement provides for the acquisition of 100% of the issued and outstanding limited liability company interests in Northfield Park Associates LLC, which owns and operates the Rocksino. The transaction is expected to close in the second half of 2018 and is subject to customary closing conditions and regulatory approvals.

 

NOTE 3 — INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

 

Investments in and advances to unconsolidated affiliates consisted of the following:  

 

 

March 31,

 

 

December 31,

 

 

2018

 

 

2017

 

 

(In thousands)

 

CityCenter Holdings, LLC – CityCenter (50%)

$

827,960

 

 

$

808,220

 

Elgin Riverboat Resort–Riverboat Casino – Grand Victoria (50%)

 

123,501

 

 

 

124,342

 

Las Vegas Arena Company, LLC (42.5%)

 

76,755

 

 

 

76,619

 

Other

 

22,579

 

 

 

24,116

 

 

$

1,050,795

 

 

$

1,033,297

 

 

The Company recorded its share of net income from unconsolidated affiliates, including adjustments for basis differences, as follows:  

 

 

Three Months Ended

 

 

March 31,

 

 

2018

 

 

2017

 

 

(In thousands)

 

Income from unconsolidated affiliates

$

31,766

 

 

$

39,766

 

Preopening and start-up expenses

 

(3,321

)

 

 

 

Non-operating items from unconsolidated affiliates

 

(9,010

)

 

 

(6,921

)

 

$

19,435

 

 

$

32,845

 

 

Mandarin Oriental. During the quarter ended March 31, 2018, a subsidiary of CityCenter entered into an agreement for the sale of the Mandarin Oriental Las Vegas and adjacent retail parcels for approximately $214 million, subject to customary closing conditions. As a result of this transaction, CityCenter recorded an impairment charge of approximately $127 million. The Company recorded a reversal of certain basis differences of $64 million, which entirely offset its 50% share of the impairment charge.

 

Grand Victoria sale. In April 2018, the Company, along with its venture partner, entered into a definitive agreement to sell the Grand Victoria Casino, of which a subsidiary of the Company owns 50% interest, to Eldorado Resorts, Inc. for $328 million in cash, subject to a working capital adjustment. The Company will receive its 50% share of the net proceeds after certain transaction costs, or approximately $162 million. The transaction is expected to close within twelve months, subject to regulatory approvals and other customary closing conditions.

 

 

10


 

NOTE 4 — LONG-TERM DEBT

 

Long-term debt consisted of the following:

 

 

March 31,

 

 

December 31,

 

 

2018

 

 

2017

 

 

(In thousands)

 

Senior credit facility

$

889,375

 

 

$

372,500

 

Operating Partnership senior credit facility

 

2,083,000

 

 

 

2,091,375

 

MGM China credit facility

 

2,163,460

 

 

 

2,301,584

 

$850 million 8.625% senior notes, due 2019

 

850,000

 

 

 

850,000

 

$500 million 5.25% senior notes, due 2020

 

500,000

 

 

 

500,000

 

$1,000 million 6.75% senior notes, due 2020

 

1,000,000

 

 

 

1,000,000

 

$1,250 million 6.625% senior notes, due 2021

 

1,250,000

 

 

 

1,250,000

 

$1,000 million 7.75% senior notes, due 2022

 

1,000,000

 

 

 

1,000,000

 

$1,250 million 6% senior notes, due 2023

 

1,250,000

 

 

 

1,250,000

 

$1,050 million 5.625% Operating Partnership senior notes, due 2024

 

1,050,000

 

 

 

1,050,000

 

$500 million 4.50% Operating Partnership senior notes, due 2026

 

500,000

 

 

 

500,000

 

$500 million 4.625% senior notes, due 2026

 

500,000

 

 

 

500,000

 

$350 million 4.50% Operating Partnership senior notes, due 2028

 

350,000

 

 

 

350,000

 

$0.6 million 7% debentures, due 2036

 

552

 

 

 

552

 

$2.3 million 6.7% debentures, due 2096

 

 

 

 

2,265

 

 

 

13,386,387

 

 

 

13,018,276

 

Less: Premiums, discounts, and unamortized debt issuance costs, net

 

(103,918

)

 

 

(109,182

)

 

 

13,282,469

 

 

 

12,909,094

 

Less: Current portion of long-term debt, net

 

(539,608

)

 

 

(158,042

)

 

$

12,742,861

 

 

$

12,751,052

 

 

Debt due within one year of the March 31, 2018 balance sheet date was classified as long-term as the Company had both the intent and ability to refinance current maturities on a long-term basis under its revolving senior credit facilities, with the exception that $281 million of 8.625% senior notes due February 2019 in excess of available borrowings under the senior credit facility and $259 million of MGM China’s term loan amortization payments in excess of available borrowings under the MGM China revolving credit facility were both classified as current. Debt due within one year of the December 31, 2017 balance sheet date was classified as long-term as the Company had both the intent and ability to refinance current maturities on a long-term basis under its revolving senior credit facilities, with the exception that $158 million related to MGM China’s term loan amortization payments in excess of available borrowings under the MGM China revolving credit facility were classified as current.

 

Senior credit facility. At March 31, 2018, the senior credit facility consisted of a $234 million term loan A facility and a $1.25 billion revolving facility. The Company permanently repaid $3 million of the term loan A facility in the three months ended March 31, 2018 in accordance with the scheduled amortization. At March 31, 2018, $655 million was drawn on the revolving credit facility. At March 31, 2018, the interest rate on the term loan A facility was 4.13% and the interest rate on the revolving credit facility was 3.98%. The Company was in compliance with its credit facility covenants at March 31, 2018.

 

Operating Partnership senior credit facility. At March 31, 2018, the Operating Partnership senior credit facility consisted of a $270 million term loan A facility, a $1.81 billion term loan B facility, and a $600 million revolving credit facility. The Operating Partnership permanently repaid $4 million of the term loan A facility and $5 million of the term loan B facility in the three months ended March 31, 2018, in accordance with the scheduled amortization. On March 23, 2018, the Operating Partnership repriced its term loan B interest rate to LIBOR plus 2.00% and extended the maturity of the term loan B facility to March 2025. The effectiveness of the extension is subject to certain conditions, which are expected to occur in May 2018. At March 31, 2018, the interest rate on the term loan A facility was 4.38% and the interest rate on the term loan B facility was 3.88%. No amounts have been drawn on the revolving credit facility. The Operating Partnership was in compliance with its credit facility covenants at March 31, 2018. 

 

The Operating Partnership is party to interest rate swaps to mitigate the interest rate risk inherent in its senior secured term loan B facility. As of March 31, 2018, the Operating Partnership pays a weighted average fixed rate of 1.844% on total notional amount of $1.2 billion and the variable rate received resets monthly to the one-month LIBOR with no minimum floor. The fair values of the interest rate swaps were $28 million and $11 million as of March 31, 2018 and December 31, 2017, respectively. The interest rate swaps were valued in a net unrealized gain position and were recorded in “Other long-term assets, net” in the accompanying consolidated balance sheets.

11


 

    

MGM China credit facility. At March 31, 2018, the MGM China credit facility consisted of $1.39 billion of term loans and a $1.45 billion revolving credit facility. The Company permanently repaid $77 million of term loans in the three months ended March 31, 2018 in accordance with the scheduled amortization. At March 31, 2018, $777 million was drawn on the revolving credit facility. At March 31, 2018, the weighted average interest rate on the term loans was 3.38% and the weighted average interest rate on the revolving credit facility was 3.23%. MGM China was in compliance with its credit facility covenants at March 31, 2018.

 

MGM China is in the process of amending its credit facility. The proposed amended facility extends the maturity date, extends the timing of and reduces the amount of scheduled amortization payments, and increases the maximum leverage ratio.

 

Fair value of long-term debt. The estimated fair value of the Company’s long-term debt was $13.7 billion and $13.6 billion at March 31, 2018 and December 31, 2017, respectively. Fair value was estimated using quoted market prices for the Company’s senior notes and senior credit facilities.

 

NOTE 5 — INCOME TAXES

 

For interim income tax reporting the Company estimates its annual effective tax rate and applies it to its year-to-date ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. The Company’s effective income tax rate was a benefit of 47.2% for the three months ended March 31, 2018 compared to a provision of 19.8% in the prior year quarter.

 

The Company recognizes deferred income tax assets, net of applicable reserves, related to net operating losses, tax credit carryforwards and certain temporary differences. The Company recognizes future tax benefits to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied.

 

During the current quarter, the Company recorded a $72 million non-cash income tax benefit measurement period adjustment under SAB118 for the tax effect of the Tax Act based upon additional information gathered and evaluated during the quarter. The adjustment primarily results from global intangible low-taxed income (“GILTI”) foreign tax credits (“FTCs”) treated as general basket income rather than GILTI basket income. Unless the Tax Act is amended or regulatory guidance is issued treating this income as GILTI basket income, the Company believes that it will utilize a greater amount of its existing FTCs during their 10-year carryforward period and has provided additional tax benefit accordingly. This additional tax benefit could be reversed in a future period should such guidance be issued, resulting in an increase in provision for income taxes in such period.  

 

This amount, and other provisional amounts recorded, related to the impact of the Tax Act, may be adjusted as the Company gathers additional information and evaluates any future regulatory or other guidance on items that may impact the valuation allowance, including, but not limited to, the treatment of income resulting from GILTI FTCs described above and allocations of interest and other expenses among active, exempt and GILTI foreign source income.

 

MGM Grand Paradise has had an agreement with the Macau government to settle the 12% complementary tax that would otherwise be due by its shareholder, MGM China, on distributions of its gaming profits by paying a flat annual payment (“annual fee arrangement”) regardless of the amount of distributable dividends. Such annual fee arrangement was effective for distributions of profits earned through December 31, 2016. On March 15, 2018, MGM Grand Paradise executed an extension of the annual fee arrangement, which covers the distributions of gaming profits earned for the period of January 1, 2017 through March 31, 2020. It requires annual payments of approximately $1 million for 2017 through 2019 and a payment of approximately $300,000 for the first quarter 2020. The Company reversed the $41 million of deferred taxes previously recorded on 2017 earnings, resulting in a reduction in provision for income taxes during the current period, partially offset by the 2017 annual payment amount.

 

NOTE 6 — COMMITMENTS AND CONTINGENCIES

 

October 1 litigation. The Company and/or certain of its subsidiaries have been named as defendants in a number of lawsuits related to the October 1, 2017 shooting in Las Vegas. The matters involve in large degree the same legal and factual issues, in each case being filed on behalf of individuals who are seeking damages for emotional distress, physical injury, medical expenses, economic damages and/or wrongful death based on assertions that the Company and/or certain of its subsidiaries were negligent. The Company has also received letters from attorneys purporting to represent persons with claims related to the October 1, 2017 shooting. Pending lawsuits were first filed in October 2017 and include actions filed by multiple individuals in the District Court of Clark County, Nevada and in the Superior Court of Los Angeles County, California. Some of the original actions have been voluntarily dismissed, and plaintiffs’ counsel indicate they anticipate re-filing the lawsuits in similar form. Additional lawsuits related to this incident may be filed in the future.

 

12


 

The Company is currently unable to reliably predict the developments in, outcome of, and economic costs and other consequences of pending or future litigation related to this matter. The Company will continue to investigate the factual and legal defenses, and evaluate these matters based on subsequent events, new information and future circumstances. The Company intends to defend against these lawsuits and ultimately believes it should prevail, but litigation of this type is inherently unpredictable. Although there are significant procedural, factual and legal issues to be resolved that could significantly affect the Company’s belief as to the possibility of liability, the Company currently believes that it is reasonably possible that it could incur liability in connection with certain of these lawsuits. The foregoing determination was made in accordance with generally accepted accounting principles, as codified in ASC 450-20, and is not an admission of any liability on the part of the Company or any of its affiliates. Given that these cases are in the early stages and in light of the uncertainties surrounding them, the Company does not currently possess sufficient information to determine a range of reasonably possible liability. In the event the Company incurs any liability, the Company believes it is unlikely it would incur losses in connection with these claims in excess of its insurance coverage. In addition, the Company’s general liability insurance coverage provides, as part of the contractual “duty to defend”, payment of legal fees and associated costs incurred to defend covered lawsuits that are filed arising from the October 1, 2017 shooting in Las Vegas. Payment of such fees and costs is in addition to (and not limited by) the limits of the insurance policies and does not erode the total liability coverage available. The insurance carriers have not expressed any reservation of rights or coverage defenses that indicate they dispute coverage under the applicable policies.

 

Other litigation. The Company is a party to various legal proceedings, most of which relate to routine matters incidental to its business. Management does not believe that the outcome of such proceedings will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

 

T-Mobile Arena senior credit facility. The Company is party to a repayment guarantee for the term loan B facility under the Las Vegas Arena Company’s senior credit facility. As of March 31, 2018, the term loan B was $50 million. As of March 31, 2018, the Company does not believe it is probable that it will need to perform on the guarantee.

 

Other guarantees. The Company and its subsidiaries are party to various guarantee contracts in the normal course of business, which are generally supported by letters of credit issued by financial institutions. The Company’s senior credit facility limits the amount of letters of credit that can be issued to $250 million, the Operating Partnership’s senior credit facility limits the amount to $75 million, and MGM China’s credit facility limits the amount to $100 million. At March 31, 2018, $14 million in letters of credit were outstanding under the Company’s senior credit facility and $38 million in letters of credit were outstanding under MGM China’s credit facility. No amounts were outstanding under the Operating Partnership senior credit facility at March 31, 2018. The amount of available borrowings under each of the credit facilities are reduced by any outstanding letters of credit.

 

 

NOTE 7 — INCOME PER SHARE OF COMMON STOCK

 

The table below reconciles basic and diluted income per share of common stock. Diluted net income attributable to common stockholders includes adjustments for redeemable noncontrolling interests and the potentially dilutive effect on the Company’s equity interests in MGP and MGM China due to shares outstanding under their respective stock compensation plans. Diluted weighted-average common and common equivalent shares include adjustments for potential dilution of share-based awards outstanding under the Company’s stock compensation plan.   

 

 

Three Months Ended

 

 

March 31,

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

Numerator: